More Fundamental Attack On Business Costs Needed
"It is pleasing that the government is making a further attempt to reduce business costs but its approach needs to be
much wider", the executive director of the New Zealand Business Roundtable, Roger Kerr, said today.
Mr Kerr said that in its last term the government's compliance cost review produced meagre results while policy changes
in areas such as taxation, employment law, utilities regulation, planning regulation and competition and securities law
had greatly increased business costs. Planned changes to workplace health and safety and redundancy law would make the
problems worse.
"It is not credible for one part of the government to talk about compliance cost reductions while other parts are
heaping additional costs on business", Mr Kerr said.
"Moreover, compliance costs are only the tip of the iceberg.
"For example, the increase in the top tax rate added to compliance costs, by making the tax system, including fringe
benefit tax, more complex. However, greater economic costs arise from the disincentives to work effort, investment and
risk taking that it created. The overall problems can only be reduced by moves to a lower, flatter tax scale as
recommended by the government's Tax Review.
"Similarly, tariff administration involves costs for both the private sector and the government, but the main economic
costs of tariffs arise from the misallocation of economic resources. The solution is to end the tariff freeze and phase
out tariffs, which would also facilitate the government's plans to negotiate free trade agreements with Hong Kong and
other countries."
Mr Kerr said that a more fundamental approach to regulatory costs was needed, along the lines of the report Constraining
Government Regulation (available at www.nzbr.org.nz) which the Business Roundtable in association with Federated Farmers
and the Auckland and Wellington chambers of commerce had recently published.
"We look forward to taking up the ideas in this report, including the possibility of a Regulatory Responsibility Act,
with the new minister of commerce", Mr Kerr concluded.
22 August 2002